Bridge and Roof Co. (India) Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 2500.00 Crs. of Bridge and Roof Co. (India) Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
	Previous	Present		Previous (31 Mar 2021)	Present
Fund Based	225.00	249.98	Long Term	BWR A+/Stable Assignment	BWR A + /Stable Reaffirmation
	(10.00)	(10.00)
	(15.00)	(15.00)
	(7.00)	(7.00)
	(15.00)	(15.00)
	(6.00)	(0.00)
Non Fund Based	2053.70	2224.72	Long Term	BWR A+/Stable Assignment	BWR A + /Stable Reaffirmation
	26.30	25.30	Short Term	BWR A1+ Assignment	BWR A1 + Reaffirmation
	(2.12)	(2.12)
	(20.00)	(20.00)
	(15.00)	(15.00)
	(28.00)	(28.00)
	(35.00)	(35.00)
Grand Total	2305.00	2500.00	(Rupees Two Thousand Five Hundred Crores Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

Brickwork Ratings has essentially relied upon the audited financials upto FY21 of Bridge and Roof Co. (India) Ltd., its brief provisional financials for FY22, projections for FY23, publicly available information, as well as information/clarifications provided by the company’s management, its bankers and auditors, to carry out the rating exercise.

The reaffirmation of ratings is based on Bridge & Roof Co. India Ltd.'s improved financial profile in FY22 (Provisional) marked by double-digit growth in topline as against a dip in revenues in FY21 owing to the impact of the pandemic, over 100 basis points in EBITDA margins in FY22 (Provisional) as compared to FY21 on the back of execution of high margins Project Management Consultancy (PMC) work orders, the Company’s focus on bagging high value orders by entering into the newer area of operations leading to a healthy order book position of Rs.17,405Crs as of 30 April 2022 (Rs.10,052crs as of January 2021) exhibiting long term revenue visibility, its comfortable gearing owing to low fund-based borrowings and a strong net worth position. The rating also takes into account the Company's constitution as a Central Public Sector Undertaking with the Government of India (GOI) (99.35%), and it's Mini Ratna Category-I status, its established operational track record of 100 years in the Civil and Mechanical Engineering industry as well as the favorable outlook arising out of the recent budgetary allocations to the Railway and Infrastructure industry (One of B&R’s key area of operations).

The rating is, however, constrained by the intensive competition in the industry, high receivables and payables days, TOL / TNW ratio, and low profitability leading to a moderate interest coverage ratio. Going forward, sustained order booking and timely execution of orders by the company leading to improvement in its profitability and credit risk profile, ensuring effective and timely realization of receivables, and efficient management of its working capital, will be crucial. 

The “Stable” outlook has been assigned since Brickwork Ratings believes that the business profile of Bridge & Roof Co. (India) Ltd. will be maintained over the medium term. The outlook factors in the favourable prospects of increase in scale of operations and better cash accruals going forward, in the backdrop of improved execution of orders. The rating outlook may be revised to Positive in case the revenues and profitability surpass the projected levels meaningfully with TOL/TNW of below 3.0x . The rating outlook may be revised to Negative if the revenues go down, and margins show lower than expected figures leading to liquidity stress, or if the TOL/TNW remains beyond 6.0x on a continuous basis.
 

KEY RATING DRIVERS

Credit Strengths:

• Improved financial performance in FY22(Provisional) :

  Total bills raised and settled, reported as revenue at Rs.2644.1Crs in FY22  (Provisional, Excluding change in Contract in Progress) grew 12% y-o-y from Rs.2365Crs in FY21, with higher execution of work orders. Total revenues of Rs.3324 Crs in FY22 (including change in contracts in progress ) were up 28% y-o-y. The Company has executed higher-margin Project Management Consulting (PMC) work orders in FY22 where the cost is borne by the contractor. This has resulted in high EBIDTA of Rs.148 Crs during FY22(Provisional) as against Rs.80Crs reported in FY21. EBIDTA margins improved to around 5% in FY22(provisional) from the range of 3% to 4% during the past three years. The Company is focussing more on projects offering higher margins, in order to maximise profitability. The Company is entitled to a fixed commission of 4% to 5% in the PMC work orders that gives low but assured profits with no exposure to cost overruns. Present order book has around 47% of the orders under the PMC model. B&R expects to achieve revenues of Rs.4000 Crs in FY23(Including change in contracts in progress).  Operating margins are expected to be at around 5% to 6% going forward. 

• Strong Revenue Visibility and healthy order booking: :

  B&R's order book position has further strengthened to Rs.17,405Crs as of 30 April 2022 from Rs.10,000Crs as of 22 Jan. 2021 considered during the last rating exercise, which is over 5.0x its FY22(Provisional) revenues. This provides long-term revenue visibility. Out of the total order book, B&R has booked orders of around Rs.4608Crs during April 2022 to May 2022. The Company has demonstrated its ability to execute orders in time, barring a few stuck/slow-moving orders due to the non availability of clear site. Besides, the current order book has about 47% of the total orders under Project Management Consultancy which would help sustain operating margins going forward.

• Order Book from Diversified Industries: :

  B&R has a well-diversified order book. The Company serves both public and private sectors in the Railways, Infrastructure, Oil & Gas, Power and other industries. This helps the Company mitigate risk of a downturn in any particular industry. Besides, the Company has recently entered into new industries like Flue Gas Desulphurisation in the Power sector and also in Irrigation canal damage repairing contracts, and has bagged substantial work orders, widening its scope of operations.

• Low Gearing :

  The Company has maintained gearing of below 1.0x in the last three years which is likely to be sustained at the same level due to low fund based borrowings and a strong net worth position of Rs.422crs as of March 31, 2022.

Credit Risks:

• High Receivable Days :

  Receivable days including retention money and unbilled revenue is high at over 200days in FY22, which is likely to increase going forward. However, excluding retention money and unbilled revenues, the debtor cycle is 55days in FY22 which is likely to remain at the same level in the near future.

• Exposed to Volatility in Raw Material Prices :

  B&R is exposed to volatility in raw material prices (Key raw materials - Steel and Cement) which is partly mitigated by a higher proportion of PMC jobs which are fixed margin contracts. About 47% of the unexecuted current order book is PMC work. However profitability margins in these orders are low. 

• High TOL/TNW :

  B&R has a high TOL/TNW ratio. It has however moderated slightly to 6.7x in FY22 from over 7.0x in the last couple of years. The ratio is expected to moderate but still remain high in the near term. TOL is high due to high trade payables. Reportedly, about 90% of the total Trade creditors are from sub contracting. As per the arrangement, most of the payables are backed by contract receivables. This helps the Company manage liquidity. As per the management, Creditors are high at year end as bills for the month of February and March every year are cleared only in April and May in the following financial year, due to which payables are high at the end of every fiscal year. The position gets rectified towards the middle of the year. 

RATING SENSITIVITIES

Positive: Increase in operating profitability margin above 8%, reduction in TOL/TNW below 3x. 

Negative: Further stretch in receivable days leading to stress in liquidity, or if the TOL/TNW remains beyond 6x and interest cover below 2x on a continuous basis, as well as a substantial reduction in flow of new orders.

LIQUIDITY INDICATORS - Adequate

B&R does not have any long term borrowings hence there are no fixed obligations to be met. Average utilization of cash credit limits is minimal while the bank guarantee limits have been utilised at ~85% over the last one year period. The company expects to generate healthy net cash accrual of ~ Rs 110cr in FY23 (against Rs.80crs in FY22 Provisional). The Company has sufficient cash and cash equivalent and has also provided margin money deposits. The Company has enhanced its BG limits for securing orders and has sufficient BG limits for executing new orders. Additionally, the Government has reduced  BG requirements from 10% of the contract value to 3% which has resulted in BGs being released which aids liquidity requirements.

ABOUT THE ENTITY

Incorporated on January 16, 1920, Bridge and Roof Company (India) Limited (B&R) is a Central Public Sector Enterprise domiciled in India and has its registered office at Kolkata, West Bengal. The Company has been under the administrative control of Department of Heavy Industry (DHI), Ministry of Heavy Industries and Public Enterprises, Government of India since incorporation. The Company serves both government and private sectors by taking up all types of Civil, Structural, Mechanical and Turnkey projects, encompassing entire industrial and infrastructure sectors. It was notified as a Miniratna Company-Category-1 on 21st Sept’2010 by the Government of India . It has completed 100 years of operations in FY20. The Company is headed by Mr.Rajesh Kumar Singh, IAS, the Chairman and Managing Director.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	2365.50	2989.77
EBITDA	Rs.Crs.	80.35	120.95
PAT	Rs.Crs.	7.80	31.42
Tangible Net Worth	Rs.Crs.	376.67	377.75
Total Debt/TNW	Times	0.52	0.48
Current Ratio	Times	1.14	1.16

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

CARE has downgraded the ratings on the bank loans of Bridge & Roof Co. (India) Ltd. to CARE BB+,Stable/CARE A4+,Issuer Not Cooperating vide press release dated 03 Nov. 2021 citing non cooperation by the Company in sharing the requisite data/information for review of ratings as well as non submission of NDS. since May 2021. 

ANY OTHER INFORMATION

NA

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2022)			2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	249.98	BWR A+/Stable (Reaffirmation)	31Mar2021	BWR A+Stable (Assignment)	NA	NA	NA	NA
FB SubLimit	LT	(10.00)	BWR A+/Stable (Reaffirmation)	31Mar2021	BWR A+Stable (Assignment)	NA	NA	NA	NA
FB SubLimit	LT	(15.00)	BWR A+/Stable (Reaffirmation)	31Mar2021	BWR A+Stable (Assignment)	NA	NA	NA	NA
FB SubLimit	LT	(7.00)	BWR A+/Stable (Reaffirmation)	31Mar2021	BWR A+Stable (Assignment)	NA	NA	NA	NA
FB SubLimit	LT	(15.00)	BWR A+/Stable (Reaffirmation)	31Mar2021	BWR A+Stable (Assignment)	NA	NA	NA	NA
Non Fund Based	LT	2224.72	BWR A+/Stable (Reaffirmation)	31Mar2021	BWR A+Stable (Assignment)	NA	NA	NA	NA
Non Fund Based	ST	25.30	BWR A1+ (Reaffirmation)	31Mar2021	BWR A1+ (Assignment)	NA	NA	NA	NA
NFB SubLimit	ST	(2.12)	BWR A1+ (Reaffirmation)	31Mar2021	BWR A1+ (Assignment)	NA	NA	NA	NA
NFB SubLimit	ST	(20.00)	BWR A1+ (Reaffirmation)	31Mar2021	BWR A1+ (Assignment)	NA	NA	NA	NA
NFB SubLimit	ST	(15.00)	BWR A1+ (Reaffirmation)	31Mar2021	BWR A1+ (Assignment)	NA	NA	NA	NA
NFB SubLimit	ST	(28.00)	BWR A1+ (Reaffirmation)	31Mar2021	BWR A1+ (Assignment)	NA	NA	NA	NA
NFB SubLimit	ST	(35.00)	BWR A1+ (Reaffirmation)	31Mar2021	BWR A1+ (Assignment)	NA	NA	NA	NA
Grand Total		2500.00	(Rupees Two Thousand Five Hundred Crores Only)

Rating Advisory, as on 07Apr2022
Press Release, as on 07Apr2022
It has not been possible to review the rating within the stipulated time, mainly due to the delay in receipt of essential documents/information required for review. However, the Company has started sharing documents/information recently, and the review - which is under process - is expected to be completed shortly

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Engineering Procurement and Construction (EPC) Companies

Analytical Contacts
Madhu Sonthalia Senior Rating Analyst Board : +91 80 4040 9940 madhusonthalia@brickworkratings.com	Anuradha Gupta Director - Ratings anuradha.g@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Indian Bank	Cash Credit - Sanctioned	_	_	0.00
	Sub-Limit (Working Capital Demand Loan) - Sanctioned	(0.00)
2	Indian Bank	Bank Guarantee - Sanctioned	_	_	0.00
3	Indian Bank	Letter of Credit - Sanctioned	_	_	0.00
4	Axis Bank Ltd.	Bank Guarantee - Sanctioned	135.00	_	135.00
	Sub-Limit (Letter of Credit) - Sanctioned		(35.00)
5	Axis Bank Ltd.	Cash Credit - Sanctioned	15.00	_	15.00
	Sub-Limit (Working Capital Demand Loan) - Sanctioned	(15.00)
6	Bank of Baroda	Bank Guarantee - Sanctioned	266.22	_	266.22
7	Bank of Baroda	Cash Credit - Sanctioned	7.94	_	7.94
8	Bank of India	Cash Credit - Sanctioned	17.40	_	17.40
9	Bank of India	Bank Guarantee - Sanctioned	34.72	_	34.72
10	Bank of Maharashtra	Letter of Credit - Sanctioned	_	10.30	10.30
11	Bank of Maharashtra	Cash Credit - Sanctioned	10.85	_	10.85
12	Bank of Maharashtra	Bank Guarantee - Sanctioned	295.18	_	295.18
13	HDFC Bank	Cash Credit - Sanctioned	20.00	_	20.00
14	HDFC Bank	Bank Guarantee - Sanctioned	28.00	_	28.00
	Sub-Limit (Letter of Credit) - Sanctioned		(28.00)
15	ICICI Bank	Cash Credit - Sanctioned	18.00	_	18.00
16	ICICI Bank	Bank Guarantee - Sanctioned	217.00	_	217.00
	Sub-Limit (Letter of Credit) - Sanctioned		(20.00)
17	Indian Bank	Bank Guarantee - Sanctioned	338.16	_	338.16
	Sub-Limit (Letter of credit) - Sanctioned		(2.12)
18	Indian Bank	Cash Credit - Sanctioned	20.00	_	20.00
	Sub-Limit (Working Capital Demand Loan) - Sanctioned	(10.00)
19	Others	Cash Credit - Proposed	16.00	_	16.00
20	Others	Bank Guarantee - Proposed	155.00	_	155.00
21	Punjab National Bank	Bank Guarantee - Sanctioned	180.44	_	180.44
	Sub-Limit (Letter of Credit) - Sanctioned		(15.00)
22	Punjab National Bank	Cash Credit - Sanctioned	32.79	_	32.79
	Sub-Limit (Working Capital Demand Loan) - Sanctioned	(15.00)
23	State Bank Of India (SBI)	Cash Credit - Sanctioned	85.00	_	85.00
24	State Bank Of India (SBI)	Bank Guarantee - Sanctioned	500.00	_	500.00
25	State Bank Of India (SBI)	Letter of Credit - Sanctioned	_	15.00	15.00
26	Yes Bank	Bank Guarantee - Sanctioned	75.00	_	75.00
27	Yes Bank	Cash Credit - Sanctioned	7.00	_	7.00
	Sub-Limit (Working Capital Demand Loan) - Sanctioned	(7.00)
Total			2474.70	25.30	2500.00
TOTAL (Rupees Two Thousand Five Hundred Crores Only)